Everything else held constant,if a central bank makes an unsterilized ________ of foreign assets,then the domestic money supply will ________ and the domestic currency will depreciate.

Question

Quizplus · Accepted Answer

An unsterilized purchase of foreign assets by a central bank increases the domestic money supply because the central bank is injecting money into the economy to buy these assets. This increase in money supply typically leads to a depreciation of the domestic currency as more of the currency is available.

Everything Else Held Constant,if a Central Bank Makes an Unsterilized